What's the Difference Between a Credit Score and a CIBIL Score?

What's the Difference Between a Credit Score and a CIBIL Score?

Knowing the state of your credit is essential for responsible borrowing. Although they are not exactly the same, credit ratings and CIBIL scores are frequently used interchangeably in India.

 What is the CIBIL Score?

A CIBIL score is a three-digit figure that indicates an individual's or company' creditworthiness. It is computed using their credit history, payment history, and other criteria. CIBIL ratings range between 300 and 900, with higher scores reflecting better credit health.

What is a credit score?

A credit score is a broad phrase that refers to several scoring methods, including CIBIL, Equifax, Experian, and CRIF High Mark. Credit scores assess an individual's or business's credit behavior and provide a numerical representation of its creditworthiness.

Key differences:

1. Scoring methods: CIBIL uses a single scoring model, whereas credit ratings can be calculated using a variety of methods.
2. Range: CIBIL scores range between 300 and 900, whereas credit ratings vary based on the scoring model.
3. Data Sources: CIBIL scores are based on data from banks, NBFCs, and other financial organizations, whereas credit scores might incorporate information from a variety of sources.

Why Is It Important to Understand the Difference? 

Understanding the distinction between CIBIL scores and credit scores can benefit you:

•  Make informed judgments: Knowing your credit score and CIBIL score will help you estimate your creditworthiness and make sound decisions about loan applications.
•  Improve your credit health: By tracking both your credit and CIBIL scores, you can discover areas for improvement and endeavor to improve your credit.
•  Avoid confusion: Understanding the distinction between CIBIL scores and credit scores might help you avoid misunderstandings when dealing with lenders or credit agencies.

In conclusion, CIBIL scores and credit scores are connected but not the same. 

 

Disclaimer:

CreditToHai blog is provided for informational purposes only. The information on this blog is not intended to be taken as professional advice. You should not rely solely on the information on this blog for making financial or credit-related decisions.

 

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